Private investigator tells lawmakers counterfeiting “out of control”
Private investigator tells lawmakers counterfeiting “out of control”
A private investigator, routinely hired by some the country’s largest retailers to investigate intellectual property rights violations, told Senate lawmakers that counterfeit products in the United States are “out of control.”
“I believe the problem will continue to grow until the public realizes that counterfeiting is not a victimless crime, and until the laws which penalize counterfeiters are strengthened,” testified Kris Buckner, president of Southern California-based Investigative Consultants, before the Senate Homeland Security and Governmental Affairs Committee Wednesday.
“The great profits and the limited risk of prosecution make it an extremely attractive enterprise,” Buckner said. “For these criminals, it is simply a matter of business: if they get caught selling drugs, they go to prison, whereas if they get caught selling counterfeit goods, they get probation.”
Since the start of Investigative Consultants in 1994, the firm has conducted more than 9,000 intellectual property rights investigations that have resulted in the recovery and seizure of more than $1 billion in counterfeit merchandise. These investigations have also helped law enforcement agencies arrest more than 3,000 individuals.
No product is immune to counterfeiting, including aircraft parts, baby formula, cough syrup and blankets. “You name it, and criminals can and will counterfeit it,” Buckner said.
According to Buckner, a majority of counterfeit merchandise is made outside the United States in countries such as China, South Korea, Taiwan and Mexico.
“Counterfeiters will often pack the counterfeit merchandise in the rear of the container and pack authentic merchandise at the front of the container,” Buckner explained. “The customs inspectors would have to unload the entire container to find the counterfeit merchandise.
“Once the counterfeit merchandise passes customs, it is taken to warehouses for distribution,” Buckner added. “The distributors then sell the merchandise to various sized wholesalers and retailers, who, in turn, sell it to consumers.”
Buckner warned the Senate committee that counterfeit operations are becoming increasingly difficult to penetrate by law enforcement.
“Sophisticated counterfeiting operations often mirror other sophisticated criminal and terrorist operations,” Buckner said. “Counterfeiting operations are divided into operating cells, often according to their manufacturing, distributing, or selling functions. By operating in cells, counterfeiters lessen the possibility that their entire operation can be taken down by law enforcement.”
Some counterfeiters hire look outs to monitor law enforcement activities. “The groups use two-way radios, and have also developed elaborate warning systems to alert vendors to impending enforcement actions,” Buckner said.
Buckner said consumers need to be better educated about the economic harm caused to them by counterfeit products.
“My company is hired by major corporations, and I know that many people don’t have any sympathy for ‘big businesses,'” Buckner said. “However, the public needs to understand that they are forced to pay higher prices for brand name products because of counterfeiters. It has been estimated that counterfeiting costs brand owners billions of dollars a year in lost revenue. Brand owners must raise their prices to recoup these losses.”
